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tv   Bloomberg Markets Americas  Bloomberg  May 2, 2018 10:00am-11:00am EDT

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welcome to "bloomberg markets." here are the top stories we are covering from the bloomberg and around the world. apple is cooking up a new plan to deal with slowing growth in the smartphone industry. talk to an analyst to just raise his price target on the shares. tesla reporting after the bell. can elon musk show the model three production and the cash burn are back on track? alliancebernstein says goodbye, new york, hello, nashville. new york loses more finance jobs for other cities. all of that and much, much more. fomc decision day. real 30 minutes into the trading day. here is julie hyman. julie: the apple beat is not enough to lift the overall market. we are seeing in recent days
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when we have gotten the reporting that the sox might rise, but -- there sox might rise, but it does not help the overall market. the nasdaq is falling less than the major averages. gettingas -- it is not any kind of substantive gains today. if you look at apple itself come yes, we are seeing a rise in today's session. if you look at the past month, it doesn't make up for the drop approaching earnings. it has on a run-up for the past -- it has had a run-up for the past three sessions. it is not recouped prior losses going into the numbers. that said, there was a lot for investors and analysts alike in the report. 's iphone sales up 2.9%. gain in revenue of 14% because of the price of the iphone x.
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take a look at the bloomberg. we have the year-over-year services revenue on a quarterly basis. that growing by 31%. not the biggest gain it has ever seen, but it did grow to a record $9.2 billion. that includes apple music and icloud. we will dig more into the apple numbers in a moment. some of the other earnings winners we are watching today include juniper networks. the revenue and guidance came in ahead of estimates based on cloud strength. mastercard numbers also beating estimates. to us in particular feeling spending therefore -- tourists in particular fueling spending their. finally, adt, the company raising its forecast for earnings-per-share growth for the full year. we have our laggards as well. gilead, the big biotech company, is the biggest single track on the s&p 500. it is down 8.5% because of its size here. the company earnings missing
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estimates with the drug selling faster than expected. um group, disability services about it, shares tumbling. zoetis? -- and animal health committee, down 4.4%. caroline, rescue me here. caroline: cap pronunciations there. i will try to -- tough annunciation's there. i will try to avoid them myself. checking out what is happening type this into0, your bloomberg on the stoxx 600, it shows you what is happening with industries. materials were up 1.9%. we see a real bounce up in terms of the mining stocks because metals are rally. -- rallying. notably, we are seeing i.t.
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stocks on the up. stoxx 600 getting a bounce at the moment, the best high we have seen in about three months. nearly everything industry group is higher. let's begin with tech in particular. we had to julie talking apple. semiconductors are outperforming in europe at the moment. 6% the than five or most. tech is on track as we see apple releasing many of the market naysayers -- really think many of the market naysayers out cap. let's look at what is happening in terms of the euro. this is feeding into the european stocks today. euroe out continues to -- continues to trade below the moving average. we're seeing the rsi function -- one of my favorites -- relative strength index. it shows you how the euro has
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been channeling below the u.s. dollar. below the yellow line, the 200-day moving average. we are seeing more negative trends potentially come because of the oversold key issue here. this is the rsi indicator. .it of a bounce in the euro king dollar shying away little bit. this has been channeling money into equities. in terms of european data, this is what is seeing pressure down on the euro. ecb has its hands tied when it comes to using back to stepping back from quantitative easing. in't looking so pretty when comes to europe. lower momentum -- we are seeing in tracking lower on slower growth. we are seeing overall in manufacturing the lowest growth in more than a year.
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notably here on the chart, we are seeing significantly low growth in terms of recent gdp numbers out of europe. eked out .4% growth. it shows that the ecb cannot be taking its foot off the pedal as quickly as many hoped. vonnie: here in the u.s., apple bulls breathing a sigh of relief. the company announced a big buyback plan and says it is cooking up new services. >> it is growing at a double-digit number on a year-over-year basis. with that kind of change, and with other services that we have we are others that working on, i think this is just a huge opportunity. michelson, senior research analyst at piper jaffray, joins us from minneapolis. raising the apple price target,
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also maintains overweight rating on the stock. what can apple get to and when? , it is a good question on multiple fronts because there was a lot of debate about that. specifically when you look at where we are modeling or what the multiple assumptions are can toassume 16 times multiple get to a price target of 214. there's a lot of talk of whether or not to include services as a .um of the parts analysis i think there is a good argument to be made that it should. 15% of the revenue is now services. and assuming services like the multiple, it is a stock price that is higher than where it is today. vonnie: where can service revenue grow to? michael: well, if you look at what the company set a couple years ago, it said it could basically double from 2016 to 2020 which would take us from
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$25 billion in 2016 up to $50 billion by 2020. we are modeling for 47.5 billion dollars. that is the upside of what we are expecting. we think that is very doable. there's definitely potential for upside as they continue to show nice growth and a lot of acceleration in the march quarter with growth from 18% in december up to 31% in march. to thee: i can dig in bloomberg and show you how much the services growth has picked up. 31% growth for the previous quarter. clearly going great. talk about the geographical basis in apple as well. we heard on the call much talk of india as an area of growth, of china -- we started to see a pickup in china once again. is this thing you are keeping a close eye on? michael: yeah, there was double-digit growth and a lot of markets. particularly in china we saw significant improvement in growth, some of the strongest
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with we have seen in several quarters. china's working for apple right now. in particular it sounds like the iphone x is doing well there, contrary to some expectations. services continue to do well additionally. , india isoing better an area for future opportunity in the next two years. we think that is something to watch as well. caroline: what about innovation, mike? comingng thought pieces out -- there are interesting thought pieces coming from bloomberg today talking about the r&d spend, or lack thereof with apple. 13% is much lower than the put forth by amazon. google channeling 16% of their overall revenue into already. do you want to see more r&d in the future? michael: not necessarily. the past innovation is important, but the next leg of innovation will be with the iphone. in particular we expect in the fall a wider array of next
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gen-that -- iphones. and then the 10s plus with a larger screen, as opposed to the 10 lite with the features stripped out. a lower-cost version of the x for those who don't like the $1000 price point. that is our expectation of what innovation will bring in the near term. longer-term it is hard to say. a lot of it will have to do with augmented reality and the fact that the company has built the largest platform for augmented reality on the planet. vonnie: at least the next question. at least the next question. apple with a $100 billion buyback plan is 16% higher than it was. how long does apple continue to reward shareholders to this and teach some cash on the books that it doesn't necessarily need to? michael: we do expect to continue aggressive buyback strategy over the next few years. we expect -- the company also alluded to on the call last
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night a continued increase in the annual dividend each year. there is definitely reason to believe that we will see more aggressive return of cash to shareholders beyond what they talked about last night. i don't think what they are going to do is take a bunch of the cash and loaded into the huge acquisition or something like that. that has not been in apple's dna, and we expect the positions they do participate in to be more technology talk in's for certain categories or they tried to add growth. vonnie: investors certainly happy today. mica, you are looking for it to go to 214. mike olson, senior research analyst at piper jaffray. thanks for joining. caroline: great conversation, a vonnie. news check of "first word" now. >> iran expects the u.s. to withdraw from the nuclear deal by may 12. a government spokesman says the
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iranian government has made operations for what it calls different days ahead. president trump has vowed to pull the u.s. out of the agreement if it is not changed. south korea says u.s. forces will stay there even if there is a peace treaty with north korea. there are almost 30,000 american troops in south korea. north korea has long demanded that they be removed as one of the conditions for giving up its nuclear weapons program. however, that didn't come up in last week's summit meeting. in the u k, prime minister theresa may's brexit war cabinet meets today and i'm explosive issue. they have to decide what to do about the irish border and customs arrangements between the u.k. anti-e.u.. if they cannot -- and the eu. if they could not find a theyfactory deal soon, could blow up the deal. global news 24 hours a day and in more than 120 companies. this is bloomberg. caroline: thank you very much
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indeed. that decision day. officials are expected to keep rates unchanged. what will they say about inflation hitting the 2% target? this is bloomberg. ♪
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caroline: live from london, i'm caroline hyde. vonnie: from new york, i am vonnie quinn. this is "bloomberg markets." it is decision day for the fed. the central bank not expected to raise interest rates today in spite of inflation hitting the target on the ecb.
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a bloomberg by intelligence rates strategist. to some extent the fomc decision was the lesser of the events. >> it seems that way. the announcement that the treasury department will be issuing more bonds is not a surprise that they are issuing more bonds, but it gives detail as to where they are issuing more bonds. they will be issuing more t-bills in the future. now they say they will issue $3 billion more in two-year notes and three-year notes will they keep on issuing many more two- and three-year notes. vonnie: this will flatten out the curve because the 10-year yield back to down and the two-year's backup. -- back up. ira: i think curves generally will continue to flatten, and supply is part of that story from a relative value perspective. what the fed will do is more
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important from how dramatically and quickly that curves continue to flatten. we think they will flatten another 25 basis points by year end. with offenses today will be important not so much in a rate hiking. they are not going to height -- hike rates today. but what is the pace in the future? are they going to do three more this year? those are important little nuances we will have to parse out of the statement today. we saw the golden ticket, if you like. some are saying that will make for a more hawkish statement today. ira: 2% inflation was coming for a while. that is one reason why the federal reserve has remained hawkish. inflation trends have been positive and to the upside. because of that, the fed wants to get in front of any potential inflationary impulses from they keep on talking about -- when you listen to all the fedspeak, they think they felt skirt still exists. when unemployment is very low,
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inflation and wages continue to rise. that is something that they are concerned with them especially given implement situation in the country and what happened to aggregate labor income which, as we put out in a note this morning, labor income keeps on growing at a pace similar to what it did in 2004 and 2005. the federal reserve in that environment continues to hike rates. caroline: i mean, fascinating that we are talking about potential for hawkishness sentiment out of the fed. rest of the world, i look at the data sluggish in europe at the moment. u.k., data has been languishing with manufacturing yesterday and gdp late last week. what about the fed and how it views the rest of the monetary policy worldwide? are they going to be giving lip service to this? are they thinking about it behind the scenes? as they raise rates, the rest of the world's forced to hold back. ira: certainly the federal
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reserve will look at the global economy. they always say here is the global economy. their focus has to be domestic. as long as the u.s. economy seems to be on decent footing, as long as the weakness in europe and other parts of the world don't significantly impact u.s. growth, the fed is probably going to look through that. i think that there is an interesting dynamic where the european central bank will be moved slower. there are already reducing the amount of quantitative easing they are doing. the question is how far back does this push potential interest-rate increases in the eurozone? i think that is something that everyone is still looking at, and something that mario draghi is going to have to continue to probably be a little bit more cautious here with the amount of stimulus, because of these unclear data at this point. caroline: and what about what is also being left unsaid come in because there was a lot of handwringing in europe --
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finance ministers are worried about trade issues brewing between the u.s. in particular and tariffs in front and focus, and we had an open letter being written into donald trump from economists in the u.s. saying we're worried about the potential single tariff focus. does the vet look at that and the domestic economy? ira: insomuch as this impacts the overall economy. the u.s. traded less of the u.s. economy than for many other countries. a trade war has the potential to have a very uneven consequences among trading partners. in aggregate, quite frankly, trade war's are never good for the economy. they might be good for certain industries in the short-term, but not in the long term. vonnie: thanks in the moment to iramberg intelligence's jersey, who will be making frequent appearances on television, i can tell you that. scott minor, the grant thornton chief economist diane swonk, and
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jeff rosenberg will all join. this is bloomberg. ♪
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caroline: this is "bloomberg markets." i am caroline hyde in london. vonnie: from new york, i am vonnie quinn. caroline: now it's that time, the muni moment with taylor riggs. taylor. taylor: hey, caroline, and ofning me today is the ceo muni at invesco. the rates just hit a 10-year high recently. you find is attractive in the rising interest-rate environment? >> thanks, taylor, good to be here. the fed is normalized on the short end of the yield curve --
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the same thing for the municipal bond market. these variable rates and demand notes reset on a weekly basis. it is very good on a short-term strategy. some of the shorter and the duration funds are using the strategy because the price is very stable and the rights move up as the fed moves up. the flipside of that is the closing funds issued these of the cost of borrowing is going out very slowly. i could put pressure on dividends -- that could put pressure on dividends. for the short strategies we like the variable rates. taylor: another thing we saw this week was detroit. -- what was happening since the exited bankruptcy. i'm not sure detroit is out of the water you. would you be a buyer? mark: they are still very dependent on one business segment, the auto segment. interesting to look at different names in the muni market.
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to put water and sewer bonds were just fine during the bankruptcy of detroit. revenue bonds do very well, whereas you don't have the pension issues that the general-obligation bonds have. we are focused more on toll roads, essential services, water and sewer bonds. we think that is a very steady market.the muni supply is low this year and that is a very good place to be. you don't hit the headline risk you get. when detroit happened, it took down a lot of the market as a whole. you can each individual name trades on its own. taylor: we are coming off a period that was pretty weak for the start of the year. where do you see opportunities with credit risk as we go into the summer months? mark: they definitely pasted take some great -- it definitely pays to take credit risks here. unis have gone down in some of the but high-yield munis have
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outperform significantly. i would say that the short muntion space in high-yield i is attractive right now. it has a positive return for the year. fundamentally, the u.s. economy is doing good and that is very good for muni credits. taylor: perfect, wonderful. mark harris of invesco. caroline: thank you, taylor riggs. great discussion. still ahead, the bullish case of tesla. we talked to one analyst who is still betting on the company. this is bloomberg. ♪
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vonnie: live from bloomberg world headquarters in new york city, i am vonnie quinn. caroline: live from bloomberg european headquarters in london, i am caroline hyde. this is "bloomberg markets."
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quick check on the european markets as we head toward the end of trade. we are approaching .6%. germany leading the charge. i was the stock is higher in germany -- every single stock is higher in germany. autos also doing well. vonnie: a massive, massive built-in crude oil inventories. we were expecting a small build time we got 6.20 2 million barrels last week. oil is dropping on that result. massive building crude oil inventories. gasoline inventories also saw a build. we were looking at a drawdown of 1.7 million barrels there. 3.9 million barrels -- we were looking at a drawdown of 1.2 million. inh fewer in this let him cash in a distillate inventories -- much fewer in distillate
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inventories and we were looking for. oil at 67.15. caroline: let's check in with news.erg "first word" more in new york. >> president trump's lawyers don't have the security clearances needed to discuss sensitive issues. if special counsel robert mueller interviews president trump. ler saytors for muel they might subpoena the president to testify before a grand jury if he refuses of voluntary interview. some of the biggest names in american economic have a one for president trump -- they say it could be 1930 all over again. more than 1100 economists have signed a letter to the president against his tariff-heavy approach to trade. area economy is losing momentum. gdp in the region expanded just
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.4% in the first quarter. that is the slowest growth rate in six quarters, and it comes as a challenge for the european central bank, which is deciding whether to ease back monitors to us measures. spain, a militant group says it has completely dissolved. the group is blamed for killing more than 850 people over the years in its campaign to establish a basque homeland in northern spain and france. global news 24 hours a day on air and at tictoc on twitter, power play more than 2700 journalists and analysts in more than 120 countries. vonnie: thank you. production issues continue to plague tesla, or do they? distances selling this production targets. the company reports for the first quarter after the ball, but some tesla watchers are course.on elon musk, of
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and analyst joins us in our new york studio. the big question is what production numbers will elon musk announce? >> what we heard a month ago is that they crossed the 2000 production number per week. we expect them to highlight some progress. we would like to hear that production is exceeding 2000 a week, and that there is still a clear path to get to 5000 by the end of the quarter. vonnie: why are we so focused on how many they come in he can yet don't knowek what another company overtake them if they are not productive enough? romit: how does a good point. people have been waiting for over a for this vehicle. production is very important. production drives revenue, which drives profitability which drives cash flow and the balance sheet.
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there is quite a bit of people betting on this company going bankrupt the next several quarters. in order to sustain themselves, it is important that they get model three production above 5000 cars per week and we see a path towards 10,000 in the next six to nine months. vonnie: we frequent the show bloomberg.on on the why would suddenly creditors give up on tesla now if there -- outsomething that was of today's call, for example? is there a tipping point with tesla? will we ever see what? romit: unless the credit markets completely deteriorate, my feeling is that within three to six months, they will not be talking about cash flows are balance sheet. we will be talking about the market opportunity. if you look at the first four
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months of the year, they have done tremendously well. every month of this year the model three has been the best-selling electric vehicle in the markets by having a high, production caroline: what about the greater vision of elon musk? what about the tesla network he writes about? what about autopilot, thomas vehicles? --autonomous vehicles? is this in your valuation as well? is this thing you will hang your hat on? great question, caroline. i think this will get addressed on the call tonight. looking ahead, market opportunity for tesla is tremendous. as soon as they get past the production issues, we will be talking about new markets like china, which is almost four times the size of the u.s. market for luxury vehicles. we will be talking about autopilot and the path to getting to level three economy
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-- autonomy. we will be talking about new cars as well. the companies planning to watch a crossover later this year. that will effectively double tesla's market opportunity by a factor of two. there is a lot to look forward to. we need to get through the near-term issues related to production and cash flow and solvency. caroline: we talk about tesla almost as if it is still a startup, but it is 15 years old. do you think with this $50 billion valuation it has that the opportunities you lay out -- they don't have a coo, they don't have ahead of sales. do you want to see that ethical-- on thecall? romit: well, they have elon musk, and he is incredibly valuable to the franchise. they're not just making a bet on tesla, they're making a bet on the ceo of the company.
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they have the right management team in place, and we will see what happens from here. we hope that they will execute better than the last few quarters. vonnie: we have a 30% float of short interest. will that figure ever change? romit: i don't think tonight is ethical-- on thecall? romit: that causes the bears to throw in the towel, but i think in three months you are going to see that short interest come down. it is remarkable that despite all the negative news that has happened today, tesla stock is still at 300. it tells you that a lot of bad news is baked in, and if the company can get past some the production targets, generate positive cash flow, i definitely the shorts will recover and you will see the stock higher than it is today. vonnie: eric rick -- very quick coverage on micron. what happens to the chipmaker? is goingu know, micron
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to a transition in the first half of the year where it is difficult to see prices week. i think it is a seasonal issue. i think it is temporary. thate optimistic on micron in the summer months you will see prices for their chips start to increase and the company will see accelerated revenue growth. tesla is an expensive stock on a lot of metrics. tesla is an expensive stock on a lot of metrics. i grown -- micron's incredible chief stock trading at less than five times earnings. we are pretty bullish about the stock. it has been under pressure in addition. i think it is temporary. vonnie: beautifully have -- you definitely have buy on there. thanks for joining. caroline: we have a lot more ahead on "bloomberg markets." atare going to be looking the brexit war cabinet as the next round of talks begin in brussels. then you will hear from an investor of "the big short"
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same. why he says the next crisis may be less severe. and we will get mark mobius on global trade tensions. this is bloomberg. ♪
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caroline: live from london, i am caroline hyde. vonnie: from new york, i am vonnie quinn. this is "bloomberg markets." time for our stock of the hour, and it is snap. shares of the social-media company plunging down 21% on an extremely disappointing quarter. abigail doolittle has details. abigail: cap missed the mark on all metrics.
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they posted a bigger loss than expected and had less daily active users than expected 191 million dollars versus the $194.3 million estimate. advertising revenue down. right across the board, lots of weakness here, and behind it, the controversial redesign of the snap app last year. they separated friends and chat from celebrities, and lots of open around that. we have a pretty negative response from wall street. losenalyst said they could their cool factor. how do they prevent defections to instagram. lots of negative chatter around snap and these results. caroline: brutal when you look at the market cap down by $2 billion. what about the opportunity? there is one bright spot i saw an analyst outline -- maybe there will be a merger and acquisition target. abigail: that's an interesting
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point, caroline. i don't know too much about that and i don't feel comfortable speculating on that opportunity. what this seems to come down to is the app redesign. we saw the ceo last year -- it was really his vision to change saying that for the growth of the company, it was already disappointing after they went public and they would need to do something. he said that celebrities are not our friends, there for the demarcation. but most social media applications they blend celebrities and well-known people with "ordinary people." on the call he said they are moving toward their mission, but he did concede that the snapchat feed for most people, there will be more of a blending between celebrities and users. if we pop into the bloomberg and look at the chart using the gtv function can we can see how bad this is. it tells you that the buyers absolutely blindsided by this.
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the technicals are so week in may suggest they have to step up and do something to make sure that the users do not defect over to competitor instagram. once you lose momentum on a chart that way, it can be difficult to shift. time will tell. the 90 minutes -- in the last 90 minutes alone. abigail, thank you for some caroline. caroline: time for a bloomberg exclusive now. we've been speaking to one of the people who helped design the trade against subprime mortgages. it is known as "the big short." greg lippman told us about the next correction. not clear is when the next recession is coming and whether we have a liquidity-driven correction first like we saw in february. erik what does it feel like to you? everyday we are closer by definition.
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greg: a lot depends on what happens with interest rates, what happens with wages and cost pressures, what happens with trade. you are seeing incidents already that some of the states with most exposure to steel prices have moderating employment growth. things will china could get sorted out. i had the pleasure of watching secretary rusk this morning and he was on his way to -- secretary ross this morning and he was on his way to china after being with us at milken. i'm confident that the next correction is not super imminent, but it is on the horizon and we are wary for it. erik: one of the things you hear a lot about from hedge-fund managers is to need as they need to invest in data and data signs. formarkets in which operate the quantitative approach -- or
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structured products more broadly still too far afield? requested. ironically, structured products were among the most quantitative things. we had loaned level data. one of the reasons structured products is a viable hedge-fund asset classes unlike equities, where anybody can start and equity hedge fund with the -- in their apartment, the computer expenses are considerable. you cannot run a business profitably -- even not negatively -- with less than $500 million. it is less competitive from that perspective. we have always had a heavy data component. at the same time, unlike equities, it is not a liquid market. a lot of the things related to quantitative trading, they don't apply in a market that is much more over-the-counter. erik: the hedge fund model is under pressure, certainly under
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pressure to deliver returns, and it appears to be evolving. how are you responding on fees, late liquidity duration of your capital, the structure of your fudn vehicles --fund vehicles? greg: every investment we make we have about the liquidity of the different funds. investments are always looked at after we say if it is a good investment or not, if it is appropriate for the liquidity of the funds we own. it is an important thing to constantly think about. , there's aes to fees lot of pressure on the model in general. we are open-minded to discussing with people. there is all kinds of ways to -- we are open-minded to discussing in terms of size locking up
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capital longer of ways. another way for people to access lower fees. , the reason it was pressure on fees is the s&p goes up pretty much all the time. you can a daily liquidity, no fees, and the s&p -- if you think the s&p can go 20% this year, we are not. we can't compete with the rising equity market. i think the hedge-fund business in general needs a 6-24-month period where equities don't consistently go up and managers can show their mettle the same way they did in 2000 to 2002, the golden age. that was the golden age of hedge funds. hedge funds were up, particularly structured products and bond hedge funds. nobody was talking about fees at that time. erik: could we see another golden age of hedge funds?
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greg: i hope so. in all seriousness, the next crisis will not be like the 2008 1. it will be less severe, but perhaps longer in duration, more the 2000-2002 we are rising interest rates, increasing deficits, a handful of cold stocks going up. even with the selloffs, some of these are up 25% on the year. i think you could see that. we had a handful of investors say to us, i want to talk about your hedge. two things about your hedge. one, it always loses money, always. two, we charge you more fees because of that. we think you are smart and honest people, we want to keep our relationship with you, but we don't want you to hedge. we promised we would never hedge . those people migrated out of the
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hedgefund x into the u -- products into the unhedged products. caroline: that of course is greg lippman. you know him from "the big short." vonnie: fun stuff. thank you, caroline. next up, road trip. alliance bernstein is moving its headquarters to nashville. more than 1000 will end up making the move. ,e are joined by jason kelly our new york bureau chief. it is a little like the amazon headquarters search. jason: i love that you said that, because i was reading this, they looked at 30 different cities, it was amazonian. cost of living, education come all of these different elements. it is a story firm with a lot of history in new york and
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elsewhere and moving to global places, national, tennessee. -- nashville, tennessee. vonnie: which is wonderful for those employees you like better weather. jason: i grew up in the south, i love nashville, great eating down there. it is an interesting window into how financial firms like others are thinking about cost more than anything, and the taxes that they -- they and their employees have to pay in a place like new york -- you and i are well familiar with that -- versus a place like nashville. a lot of these cities, just as they did with amazon, are making their cases to companies that they will cut deals and give them breaks to relocate to the city. vonnie: another thing i found fascinating about the story -- it is wonderful and everyone should read it on the bloomberg -- now in new york city, there's 177,000 financial services
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employees in which is only down 6% from the financial crisis. you might have thought it would be down more. jason: you might have thought it would be down more. the only thing i will turn it around on is that if you look at other private sector -- the broader private sector, it is up 23%. you have seen a little bit of attrition. as you say, it could have been hit much harder. we will see as the new tax plan figures its way through, do more, just start to move down. do we think that -- do more companies start to move down. do we think that jpmorgan and goldman sachs will move wall street down to broadway were all the hockey talks are internet -- nashville? are in a probably not. up their seen them presence in places like salt lake city, jacksonville, florida, in the case of deutsche
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bank. they're listening to employees about where they want to live, and it is not great -- i'm putting on my head as the new york bureau chief -- all of these folks did stay. it is the vibrant money capital of the world, we think, and will be for a long time. vonnie: what is interesting here is that we are just hearing from a greg lippman talking about the pressure on hedge funds and fees . we looking at a money manager with pressure on fees. the company anywhere where they potentially can make that little bit less -- is it particularly the money managers you might be seeing looking for cost cutting in this white? -- in this way? jason: it is a great question, and the amount of money flowing in the hedge funds -- if there is a sector of the financial existentials in crisis commit it is the hedge fund world, and greg lippman put a fine point on it in an interview with erik schatzker. ees, there is f
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less money to be made, and people have to think about the cost as they think about how they run the businesses, certainly. institutional investors are willing to pay less and less, in part because the have been getting really good returns from a bull market that has lasted a very long time by plucking their their moneynking into index funds. the cost side of running the money management firm or bank certainly plays into this, and it certainly played into alliancebernstein's decision here. caroline: and i sit here in london looking at the day in, day out talk and potentially bankers forced to move to the likes of frankfurt, amsterdam is really what the draw is is how can you replace the vibrancy of the city or the lifestyle, such as london. that has got to be a key issue when you are asking people to move from new york how to move them to a different pace of life. jason: i think that is exactly
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right, and it is a big question you have to ask. i am an old guy with kids, so i would love to live in a place like nashville, but maybe my 23-year-old self might not be as excited to move from place like new york city to nashville. i think the other question that comes up in this case, and i think it comes up a little less in the brexit conversations come is ok, you move down there for alliancebernstein, but you will not hop to one of 8 other banks down there. nashville has a vibrant , it iste community there a big health care town, but it is not a banking center. no, flying out of memphis, tennessee -- there is an airport a couple hours away from different hubs. other banks have been doing this, too. goldman sachs is in salek city,
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and other temples. is definitely true. technology has made it possible for people to live all over the place. caroline, your point about money management -- people manage money in charlottesville, virginia. they manage money in charlotte, north carolina. those types of businesses empowered by technology -- warren buffett has done just fine in omaha. we will see how this goes. it will be an interesting -- interesting to see whether more and more banks give into this. vonnie: how thanks to jason kelly, bloomberg executive editor of the new york bureau chief. this is bloomberg. ♪ is is bloomberg. ♪ .
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.ark: 11:00 p.m. in hong kong 30 minutes left in the trading day in europe. from bloomberg's european .eadquarters, i am mark barton
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andie: i am vonnie quinn this is the european close on bloomberg markets. ♪ mark: here are the top stories from the bloomberg and around the world. the brexit war cabinet as the next round of talks in brussels. can a trade war be averted? the latest talks between the u.s. and china. the protége overtakes the .aster european equities 30 minutes away from the wednesday session with stocks rising today after the public holiday yesterday closed most of europe.


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